Land of opportunity

19 October 2012Editor Paul Jarvis looks at the various prospects sprouting from the Scottish market

Ever since the Treasury brought the PFI juggernaut to a halt, all eyes have turned to Scotland. After four years working out how to replace PFI, the Scots eventually got their act together just as the rest of the country was seeing a hiatus in activity.

Whether or not the non-profit distributing (NPD) model is at heart any different to PFI can be debated ad infinitum. But at the end of the day it matters little because there is clear evidence of projects getting done. And, if you believe the Scottish Futures Trust’s (SFT) statement of benefits, infrastructure projects are being delivered more efficiently than if they had been publicly procured.

Earlier this month, the SFT published an updated version of its £2.5bn pipeline. It is packed with opportunities for partnerships, whether through the Hub programme for new health facilities, NPD schools or new road projects.

Indeed, for all the scepticism south of the border (“We are not going to do a Scotland,” said Infrastructure UK’s Geoffrey Spence when launching the PFI review last year), the SFT has made sufficient efficiencies to deliver 12 more schools than originally planned.

The trust has also managed to get the Scottish media on-side. There are few murmurings in the press pointing out that the NPD programme is using the same private contractors, financiers and general profit-makers that have been so heavily criticised for their role in PFI.

But questions still remain. Quite how willing contractors will be to continue playing the NPD game if and when a market returns in England is far from clear, for example.

And the NPD model offers no more of an incentive for institutional investors to get involved in greenfield projects than PFI. With the banking market still on its knees, alternative financing will have to be found if that £2.5bn pipeline is to be funded.

Then there’s the various models still in the early stages of development, perhaps most noticeably tax increment financing. Can Scotland lead the rest of the UK here, or is it setting itself up for a fall?

Perhaps for now, though, the big bonus for Scotland is that it has a government that has not only stated its commitment to infrastructure, but has followed that through. Nicola Sturgeon, the keynote speaker at our event on Thursday, now has a brief covering infrastructure as part of her role as deputy first minister. For more information on our Financing Scottish Infrastructure event, click here.